Fannie Mae CEO's bonus target set at $2.6 million

Fannie Mae set the 2006 target bonus of Chief Executive Daniel H. Mudd at 2.75 times his salary, or $2.61 million, and added a new performance goal for him, the company said in a filing with the Securities and Exchange Commission Friday.

The new goal will be "to optimize the company's business model and generate shareholder value," according to the mortgage giant's SEC filing.

"The goals for 2006 are similar to the company's goals for 2005 with the addition in 2006 of the goal to optimize the company's business model and generate shareholder value. Prior to 2005, performance goals for the Annual Incentive Plan were tied to growth in earnings per share of Fannie Mae's common stock," the company said in the filing.

In 2005, Fannie Mae said Mudd wouldn't get a raise for 2006, but he was granted a cash bonus of $2.59 million for his 2005 performance, and the company set his 2006 salary at $950,000.

The government-sponsored housing enterprise has been rebuilding its management team since ousting the chief executive and chief financial officers last year as accounting problems surfaced.

In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae's chief financial officer, Timothy Howard, resigned Dec. 21.

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